Post on 20-Aug-2020
Tips for Optimizing your B2B Trading Community
STERLING COMMERCE WHITE PAPER
Tips for Optimizing your B2B Trading Community2
©2010. Sterling Commerce, Inc.
IntroductionOrganizations have made significant investments in B2B software and connectivity to
automate business transactions with their trading partners. The primary objective has
been to drive efficiencies with large trading partners; however, there is still much room
for improvement.
As it stands now, many businesses adhere to the 80/20 rule or Pareto Principle1;
electronically linking with only 20 percent of their partners, which represents as much as
80 percent of their transaction volumes and/or revenues. Within this group of electronic
partners, companies are often failing to maximize the potential of these existing
trading partner connections, such that only portions of business processes have been
automated. Consider the situation of only automating a purchase order or invoice; but
not the entire order-to-cash or purchase-to-pay business process. You will continue
to have costly and error prone manual transactions (such as purchase order changes
or acknowledgements, advance ship notices, ship status, or payment remittances)
conducted by phone, fax, e-mail, and postal mail with electronically-enabled partners.
Companies are failing to automate transactions with the remaining 80 percent of their
trading partners. This trend is often driven by the misconception that it is expensive and
complex (and therefore, not worth the time, money, or effort) to enable those trading
partners with lower transaction volumes. This failure may also be attributed to a lack of
awareness of industry solutions that are focused on enabling these smaller partners with
minimal incremental resource impact. However, it is even more likely that this failure
is a result of companies not fully understanding the true cost of conducting manual
transactions, and the impacts of manual transactions on customer satisfaction, margin
erosion, visibility, and cycle times.
This white paper illustrates how Sterling Commerce solutions drive greater
efficiencies, and improve the return on your B2B infrastructure investment. It explores
a straightforward approach to how Sterling Commerce identifies opportunities to
automate more transactions with your existing electronic partners, and how Sterling
Commerce solutions simplify the assessment and onboarding of the remaining 80
percent of your manual trading partners.
1 Pareto Principle: a theory that states for many phenomena 80% of the effects stem from 20% of the causes; also called 80-20 rule, Pareto's law. Source: http://www.dictionary.com
Tips for Optimizing your B2B Trading Community3
©2010. Sterling Commerce, Inc.
Trading partner segmentation trends
The trading situation many companies have today is inefficient—companies pay for
a service that they don’t use, and adhere to the 80/20 rule; namely integrating and
automating their connections with Tier 1 trading partners and few Tier 2 partners.
Figure 1 shows the trend of B2B strategy segmentation, and how most companies
believe it is not worth the time, money, or effort to integrate below the dotted line, with
Tier 3 and Tier 4 partners.
Tier 1 trading partners characteristically trade large document volumes, and are easier
to integrate with because they have a sufficient IT staff, and have invested resources
to be electronically enabled. Tier 1 companies are often large organizations, industry
leaders, and wield the most influence in the supply chain hierarchy. Tier 1 partners tend
to be initiators of electronic commerce initiatives.
Most Tier 2 trading partners are moderate with respect to document volume per
partner, integration complexity, capabilities, and representation within the trading
partner community. Many Tier 2 partners communicate electronically, because they
are required to do so by a Tier 1 partner. Most do not seek additional electronic
relationships because they lack resources and awareness of alternative solutions.
In general, Tier 3 and Tier 4 partners are strictly manual and use phone, fax, e-mail, and
postal mail. They are characterized by low document volumes, little or no integration
capabilities, and a limited IT staff. Although they are perceived to be challenging to
integrate, Tier 3 and Tier 4 partners represent the largest portion of the trading partner
community. These partners confuse e-mail and fax with electronic commerce, failing to
realize the manual intervention in creating, sending, receiving, and processing these
documents.
Figure 1:
Electronic Commerce Segmentation
Trends: Value Assumption
Tips for Optimizing your B2B Trading Community4
©2010. Sterling Commerce, Inc.
Changing the behaviors of these Tier 3 and Tier 4 partners can be difficult. You need
solutions that make it easier for them to do business with you, especially when it
comes to business that involves their customers. However, your trading partners will be
more easily convinced to change their behavior if there is something in it for them—
discounts, favorable payment terms, or even the value proposition of greater visibility
into their transactions.
Why does this trend exist?
There are many contributing factors as previously highlighted; however, one of the
most common explanations is that of value captured. In keeping with the previous
framework, Figure 2 adds a fifth characteristic, Value Captured. Represented by an
inverted triangle, it illustrates how the largest value can be captured with the smallest
portion of the community (Tier 1), which remains in line with the 80/20 rule.
While this is a valid reason to choose Tier 1 trading partners as your starting point; it
should not be considered the basis for a long-term electronic commerce strategy. This
concept is most likely based on the consideration of cost-to-implement as it relates
to effort, which is acceptable if you are onboarding and supporting these partners
yourself. However, if you use a hosted or managed services provider, like Sterling
Commerce, implementation can be accomplished with low cost, high value solutions
without adding incremental IT resources.
An alternative perspective on this trend is displayed in Figure 3, where the fifth triangle
is changed from value captured to implementation costs.
As shown in the diagram, the greatest investment is made during the initial setup of
your B2B infrastructure. Over time, the average implementation costs go down and
more value is returned. This may not be true if your strategy requires you to manage
and support a direct connection for each trading partner. Regardless of how you choose
to implement your top tier partners, you’ll see the biggest savings—with the least
amount of effort—by enabling the remaining partners using a network or managed
service solution.
Figure 2:
Electronic Commerce Segmentation
Trends: Value Captured
Tips for Optimizing your B2B Trading Community5
©2010. Sterling Commerce, Inc.
Fact or fiction
It is not worth the time, money, and effort to automate business processes with
partners who fall below the dotted line.
Consider the one thing that is constant throughout all three of the previous figures—the
cost to process a manual document. The following example compares the number of
partners and document volumes for Tier 1 trading partners, versus Tier 2, Tier 3, and
Tier 4 trading partners.
While the number of partners and the volume of documents are a major factor in terms
of priority, the true cost of manual processing is in the process itself, not the volume.
If the goal of electronic commerce with your partners is to reduce cost and increase
revenues, there is a clear case for continuing to enable as many partners as possible.
The analysts’ perspective on automation
In a recent report, Gartner commented on the seamless execution of business
processes between two companies, stating that automating such business activities
helps drive bottom-line revenue through reduced errors, reduced cost of operations,
and faster process execution. While linking companies together over a common
network brings efficiencies, it’s apparent that improved multi-enterprise integration
also drives top-line revenue by lowering automation barriers, improving customer and
business partner satisfaction, and increasing ‘stickiness’ once automated processes and
data exchanges are implemented.
Recent AMR research performed on behalf of Sterling Commerce found that 80 percent
of the companies surveyed felt it was just as important to electronically collaborate with
small partners as it was with large partners. That begs the question—what is holding
them back? In a similar study from late 2006, AMR found that buyers and suppliers
were not investing in B2B automation solutions with more trading partners because
of their perception that the true cost of installation and maintenance (the true TCO) of
a new solution was too high. They also thought that a new solution really meant new
Is there value in automating
small trading partners?Assume the processing cost of a manual purchase order or invoice is $10:
•Tier1TradingPartners: 100 Partners x 1000 Transactions x $10 = $1 million
•Tier2–4TradingPartners: 1000 Partners x 100 Transactions x $10 = $1 million
The cost is in the manual processing of a document regardless of volume per customer.
Conclusion: Automation = improved cost savings and profitability
Figure 3:
Electronic Commerce Segmentation
Trends: Implementation Costs
Tips for Optimizing your B2B Trading Community6
©2010. Sterling Commerce, Inc.
technology, people and processes, and that their budgets would not accommodate
such costs. Together with the common misperception that B2B automation is too
complex, it’s clear that people don’t understand the true costs and benefits of
implementing B2B automation solutions.
AMR also found that the organizations that are investing in B2B automation are doing
so to gain more efficient processing, reduced overhead, lowered transaction costs on
the buy side, and improved customer satisfaction on the sell side. The companies know
the benefit outweighs the cost.
Optimize Your B2B Investment with a Sterling Commerce B2B Community AssessmentSterling Commerce provides proven strategies that optimize your cost savings, revenue
potential, and visibility while maximizing your B2B infrastructure ROI and lowering your
TCO. As a Sterling Commerce customer, you can request a professional assessment of
your company’s B2B community to better understand those areas where you are manually
intervening with any and all of the business processes (for example, buying/selling,
shipping/receiving, billing/paying), and the savings that result. A Sterling Commerce B2B
community assessment includes a document expansion analysis in which opportunities
for greater efficiency with your existing partners will be highlighted. Initial reports focus
on the order-to-cash and procure-to-pay processes, but can be expanded to include any
document that you are currently trading on the IBM® Sterling B2B Collaboration Network.
Strategy one: Optimize your current electronic trading relationships that are
above the line
When a business process moves from end-to-end with no paper changing hands,
and no manual intervention, the full benefits of B2B commerce can be realized. Cost
savings, better profit margins, shorter cash-to-cash cycles, and competitive advantage
are common results experienced by companies that convert trading partners to fully
automated business processes.
The document expansion analysis provides four critical pieces of information that can
lead to increased savings with your existing electronic community.
1. The number of partners capable of—but not—trading documents that you have
already enabled with others, and the average number of documents that could
be automated as a result. For example, if you are trading purchase orders (document
850) with most of your partners electronically, but only some partners are trading
invoices (document 810), we can identify those partners currently trading invoices with
others, but not you. The assumption is that these partners may be more willing to trade
invoices with you since they are already capable and thus quicker to onboard. (See
Figure 4: Sample Inbound Invoices.)
Tips for Optimizing your B2B Trading Community7
©2010. Sterling Commerce, Inc.
2. The number of partners that are electronic with you, but not currently capable of
trading the specific document in question, and the average number of documents
that could be automated if they were capable. These are the partners that are trading
purchase orders with you but not invoices, and they are not trading invoices with
anyone else on the Sterling B2B Collaboration Network, and thus are not recognized as
currently capable for invoices.
3. Those documents that you have not enabled that have the greatest opportunity
for adoption by your community. Specifically, this report provides you with the
number of current electronic partners trading the proposed document with others, but
not you. For example, if you’re not trading Advanced Ship Notices (document 856) with
your community, you could determine how many of your partners have this capability
with other companies. The assumption is that your success will be higher with those
documents with which you have the greatest number of partners already trading with
others.
4. The potential savings from automation of documents. In the previous data points,
the average number of documents to be enabled can be calculated and applied with
either an internal cost that you provide for manual processing or an industry median
processing cost based on Sterling Commerce and Forrester Consulting research. (See
Appendix A: Median Industry Values for Manual Processing.) From this cost calculation
we can estimate a potential savings from automation. This cost can be calculated
manually, or with our B2B Automation Savings Calculator for a more in depth analysis
that takes into consideration error rates and reconciliation costs.
Sample analysis of automation of inbound invoices from suppliers
The following example focuses on automating an invoice from suppliers. Let’s say
that you currently trade electronic invoices with 10 suppliers, yet there are 85 other
suppliers in your community who have the ability to trade invoices—and are doing
so with other companies. The number of documents that could be traded with the
additional 85 suppliers is referred to as upside documents. A conservative cost-
savings estimate of $5 per document (going from paper to electronic) means an
estimated savings of $1.54M per month, with the additional 85 partners trading the 810
document. (307,700 x $5 = $1,538,500.) That is an estimated transactional savings of
$18.5M per year. Additional savings may be recognized from prepayment discounts,
the absence of late pay fees, and improved visibility of cycle times.
Inbound 810 documents: Invoice Average # for last 12 months
# of documents 36,200
# of trading partners trading 10
Average # of docs per trading partner 3,620
# of trading partners capable, but not trading* 85
Estimated # of upside documents 307,700
* Results are provided as aggregate potential documents and individual partner names cannot be divulged. However, by engaging with IBM® Sterling Community Development Services, and upon a receipt of your trading partner listing, a recruitment program can be developed and executed.
Figure 4:
Sample Inbound Invoices
Tips for Optimizing your B2B Trading Community8
©2010. Sterling Commerce, Inc.
Sample analysis of automation of outbound invoices to customers
In this example you currently trade electronic invoices with 6 customers, however, there
are 11 other customers in your community who have the ability to receive electronic
invoices, and do so with other suppliers. The number of invoices that could be traded
with the additional 11 customers is referred to as upside documents. A conservative
cost-savings estimate of $5 per document (going from paper to electronic) means
an estimated savings of $197K per month with the additional 11 customers trading
invoices. (39,446 x $5 = $197,230.) That is a savings of $2.37M per year.
Outbound 810 documents: Invoice Average # for last 12 months
# of documents 21,520
# of trading partners trading 6
Average # of docs per trading partner 3,586
# of trading partners capable, but not trading* 11
Estimated # of upside documents 39,446
* Results are provided as aggregate potential documents and individual partner names cannot be divulged. However, by engaging with Sterling Community Development Services, and upon a receipt of your trading partner listing, a recruitment program can be developed and executed.
Companies can realize significant cost savings by implementing a new EDI document
with trading partners (suppliers, customers, logistics firms, financial organizations,
brokers and more) in order to realize greater efficiencies within the supply chain and
reduce internal costs. Furthermore, this approach often yields greater trading partner
penetration into the Tier 2 partner segment.
Strategy two: Enable your manual partners that are below the line
As previously mentioned, many companies believe that automating their smaller,
Tier 2, Tier 3, and Tier 4 trading partners is not worth the time or effort due to the
lack of technology, budget, and resources for onboarding small partners. This myth
is usually perpetuated by a lack of information surrounding the actual cost of manual
trading relationships, the potential savings, and the availability of solutions suitable for
enabling many of these Tier 2, Tier 3 and Tier 4 trading partners. Understanding these
costs and the associated savings potential is usually the first hurdle in enabling those
partners below the line.
The following steps will position you to successfully execute your strategy to enable
your lower tier trading partners.
Step 1: Build a case for enabling manual partners
As part of the Sterling Commerce B2B community assessment, a B2B automation
savings report is created for you. This nine page report quantifies the potential savings
associated with automating manual business processes and provides:
Valuable insight into your manual processing costs and savings•
Analyst quotes to support your B2B automation business case •
Comprehensive assessments, complete with next steps for prioritization•
Figure 5:
Sample Outbound Invoices
Tips for Optimizing your B2B Trading Community9
©2010. Sterling Commerce, Inc.
The B2B Automation Savings Report focuses on the cost of manually processing order-
to-cash and purchase-to-pay documents, and determines the best areas for automation
efforts such as purchase orders, invoices, and shipment notifications.
In the following example, the B2B Automation Savings Report shows that a company
with 600 trading partners; processing 80 percent of its transactions manually each
year, spends as much as $1.1 million per year in transaction costs alone. The savings
assumption from Forrester Consulting is that companies can conservatively save 20 to
50 percent of their manual transaction costs through automation, and derive significant
savings.
Sterling Commerce believes savings estimates to be on the low end when compared to
actual savings from Sterling Commerce customers, which are higher than the suggested
50 percent savings. Additionally, the speed at which you realize these savings is
dependent on the solution you choose, and the time it takes to electronically enable
your trading partners. Will you enable them internally, or outsource the recruitment and
enablement to Sterling Commerce?
Figure 6:
Sterling B2B Automation Savings
Report Sample
Tips for Optimizing your B2B Trading Community10
©2010. Sterling Commerce, Inc.
Step 2: Determine your strategy
When determining your strategy, consider the following key factors:
Behavior Changes—Will your solution require a behavior change, and will you use
incentives, mandates, or formal requests for compliance?
What behavioral change do you want your small manual partners to make, and is the
change beneficial to them? The more change you request from your partners, the
greater the associated benefit you need to provide. Some successful benefits include:
Discounts for electronic orders•
Better payment terms for customers or faster payment to suppliers•
Improved or guaranteed delivery/promise dates •
Increased visibility into the larger order/supply chain •
Improved supplier ratings •
Small changes are easy to implement, and can mean big savings for you. For example,
asking a customer who faxes orders to switch to a fax-to-EDI conversion service is
a small change. They just have to put a new number in their fax machine memory,
and change their fax form. For you, it eliminates costly and time-consuming manual
processing.
Customers vs. Suppliers—Will you focus on customers or suppliers, and which
of the two would be more willing to change their business processing behavior
for you?
They may be small customers; but they are your customers, and they can impact your
business, your reputation, and possibly your bottom line. Don’t shake the big stick of a
requirement or mandate, unless you have no alternative, and include an incentive.
Suppliers on the other hand, serve you as the customer, and will be more likely to
comply with your request, as long as your solution can be easily implemented and
managed without substantial costs and complexity.
Document Type vs. Communications Format—Will you focus on a particular
document, or a particular communication format, such as e-mail or fax?
What is your reason for electronic enablement? Ordering efficiency? Purchasing
efficiency? Transaction cost reduction? Knowing your priorities will lead you to the right
documents. Purchase orders and invoices have the highest cost to manually process,
and often contain the greatest number of errors. For that reason, they are usually the
first documents to be automated.
Communications formats are an easy way to segment your manual partners.
Fax—Partners who send and receive faxes are prime candidates for a fax conversion •
service. Their behavior is not impacted, yet you receive the benefits. Convert
inbound fax orders from your customers to EDI, or have your outbound orders
Forrester Research has found that the key benefits associated with moving from manual to automated information exchange systems are:
•Improvedproductivity
•Shortercycletimes
•Lowerprocessingcosts
•ImprovedcustomerserviceSource: “Justifying B2B Integration,” Forrester Research, Inc.,
February 9, 2007.
Tips for Optimizing your B2B Trading Community11
©2010. Sterling Commerce, Inc.
converted from EDI to fax, and delivered to your suppliers. Either way, the impact is
low and you reap the savings from automation.
E-mail—Customers who exchange documents by e-mail, have Internet access. They •
may be willing to use Web forms instead of e-mail. You can choreograph the ordering
process to reduce errors, or enforce business rules that result in greater accuracy and
shorter cycle times.
Phone and Postal Mail—Do you really know your partner’s capabilities? It is possible •
they are already doing business electronically? Are they are sending you electronic
purchase orders, but you are mailing them invoices?
Hub Sponsor vs. Spoke Paid—Will you sponsor the cost of enablement for your
trading partner, or require them to pay?
When choosing a solution, determine whether or not you will absorb the cost of
enablement or pass this on to your trading partners. The cost of enablement is often a
reason why smaller companies choose not to comply with e-commerce initiatives. You
may be surprised to find that in many cases, it may actually be less expensive for you to
sponsor a trading partner versus continuing to process documents manually. Examples
of hub sponsorship can be illustrated with sponsored Web Forms communities, or Fax
Conversion services.
Step 3: Select a solution for manual partner enablement
These days, there are many options available to companies for electronic compliance.
Assuming you don’t require your partners to purchase B2B software or contract with a
service provider, a few key options remain.
IBM® Sterling Web Forms—A Web portal for your trading partners that only requires a
Web browser. Sterling Commerce provides the solution, Sterling Web Forms—a secure
Web site that allows you and your trading partners to create and exchange business
documents electronically over the Internet, extending business-to-business capabilities
to your partners regardless of their size or technical expertise. This solution can be
billed directly to your partners, or you can sponsor and pay for their use. The sponsor
model is becoming more popular, as companies realize the overall savings generated
by automating these manual transactions. Sterling Web Forms is great for ensuring
perfect orders, and choreographing defined processes to ensure that they are properly
executed with the required documents.
IBM® Sterling Fax Conversion Services—Provides a safe, efficient way to convert
incoming fax, e-mail, and paper-based transactions into electronic transactions that can
be passed directly to your backend systems for processing. Beyond the benefits related
to reducing errors, processing time, and processing costs, this solution is also low-to-no
impact on your trading partners’ current behavior—they continue to send faxes and you
reap the benefits. Sterling Fax Conversion Services has a very high success rate with its
automatic enablement and minimal impact on internal IT resources.
Tips for Optimizing your B2B Trading Community12
©2010. Sterling Commerce, Inc.
IBM® Sterling Community Development Services—Enable more business processes
with existing electronic partners, and onboard new partners regardless of their size or
technology capabilities.
Recruit new partners easily.• Community management experts research your partners’
capabilities and likelihood of complying with your B2B initiatives. Conversion
assistance is provided for your business partners with the migration of existing EDI
traffic from your current VAN (value-added network) to the Sterling B2B Collaboration
Network.
Offer onboarding solutions for any size partner.• We offer solutions that work for any
size business partner. We can convert incoming faxes to EDI or XML, comply with
AS2 mandates, and provide translation and mapping services. Sterling Web Forms
enables document exchange over the Internet.
Ensure successful trading with new partners.• Communication and data-verification
tests ensure successful trading and ongoing operations.
Step 4: Implement best practices for success
For over 30 years, Sterling Commerce has been providing secure connectivity and
collaboration to more than 30,000 customers across the globe, and across all industries.
Based on our knowledge and experience, the following best practices are proven to be
reliable in leading to B2B success.
Start with small behavior or process changes that your customers can make—the •
smaller the change, the higher the adoption. Technology enables small behavior
changes on the customer and supplier side to feed into automated processes.
Offer a compelling benefit that answers their question, “Why should I change the •
way I do business?” By offering a value-driven business reason to change, you can
implement automation, and make things easier for everyone.
Educate your customers. Let them know what you want to do, why you want to do it, •
and how it will benefit them. (See Appendix B, Benefits by Document.)
Walk them through the process. Even small changes seem larger when you are on •
your own.
Moving forward
You should now have a better understanding of the true cost of manual transactions,
the benefits of automation, and identifying opportunities to automate with all of your
trading partners. Sterling Commerce can help you drive greater efficiencies by:
Automating more of your business documents •
Implementing solutions that increase partner participation without requiring •
substantial partner investment, expertise, or behavioral changes
Providing solutions that ease the resource burden of onboarding additional •
documents and partners
Leveraging your existing investment to deliver more savings to your bottom line•
Tips for Optimizing your B2B Trading Community13
©2010. Sterling Commerce, Inc.
Sterling Commerce has the knowledge, experience, and tools to position you to
successfully execute your B2B strategy.
For a Sterling Commerce B2B community assessment
Contact Sterling Commerce. Include your name, e-mail address, phone number,
company name, and billing account ID. If you do not have a billing account ID, contact
us and we will confirm that we have the latest information for your organization. You
can also generate a B2B automation savings report using our online calculator at
http://www.sterlingb2bautomation.com/
Appendix A
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©2010. Sterling Commerce, Inc.
Appendix B: Benefits by Document Type
Benefits of Electronic Purchase Order (850)
Benefits to Sender
Reduced inventory•
Order processed faster by receiver –
Order fill rates improve –
Inbound shipments are entered into •
inventory faster due to reduced
exceptions
Increased revenue•
Reduced lost sales due to stock outs –
Increased efficiency•
Decreased manual processing –
Fewer errors –
Free up warehouse staff due to –
reduced returns
Free up accounts payable staff due –
to avoiding pricing exceptions
Benefits to Receiver
Free up order processing staff due •
to reduced manual effort in order
processing required to:
Handle paper/phoned-in order –
Manually process order –
Address exceptions created by –
manual processing/key-entry
Improved customer service•
Reduced order processing cycle time –
Improved order fill rates –
Increased efficiency•
Decreased manual processing –
Fewer errors due to rekeying –
Free up warehouse staff which •
previously had to handle returns
Free up accounts receivable staff •
due to reduced invoice pricing
exceptions
Benefits of Electronic PO Acknowledgement (855)
Benefits to Sender
Improved customer service•
Provide advance notice of short- –
ships, out-of-stocks, back-orders,
substitutions, etc.
Increased efficiency•
Reduced manual handling of order –
status calls from customers
Benefits to Receiver
Increased revenue•
Have the ability to pre-act due to –
accelerated notification of shipping
exceptions
Reduced lost sales due to stock outs –
Reduced buyer intervention due •
to opportunity to automate the
reconciliation of order content with
intended order fulfillment content and
shipping date
Increased efficiency•
Decreased manual processing –
Fewer errors –
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©2010. Sterling Commerce, Inc.
Benefits of Electronic PO Change Requests (860)
Benefits to Sender
Receive products more quickly•
Reduce the amount of time it takes –
the receiver to adjust to the new
information
Increased efficiency•
Decreased manual processing –
Fewer errors –
Reduced inventory•
Order processed faster by receiver –
Order fill rates improve –
Audit trail•
Benefits to Receiver
Improved customer service•
Reduced order processing cycle time –
Quickly determine where the order •
is in the order fulfillment process
Quickly halt that process•
Easily adjust to and accommodate •
the change
Improved order fill rates•
Increased efficiency•
Decreased manual processing –
Fewer errors due to rekeying –
Free up warehouse staff which •
previously had to handle returns
resulting from manual order
processing errors
Benefits of Electronic Advance Ship Notice (856)
Benefits to Sender
Improved customer service•
Providing customer with advance –
notice of short-ships, out-of-stocks,
back-orders, substitutions, etc.
Reduced charge backs previously •
caused by inaccurate shipments
Increased efficiency•
Decreased manual processing –
Fewer errors due to rekeying –
Free up customer service staff due •
to reduced shipment exception
inquiries
Free up warehouse staff which •
previously had to handle returns
Benefits to Receiver
Accelerated notification of shipping •
exceptions
Able to pre-act and avoid stock outs, –
short-ships, and out-of-stocks
Preplan the receiving of product•
Reduced inventory•
Improved product receipt –
Improved inventory stocking cycle –
time
Improved order fill rates –
Benefits of Electronic Invoices (810)
Benefits to Sender
Improved cash flow due to earlier •
receipt of payments
Increased efficiency•
Decreased manual processing –
Fewer errors –
Free up accounts receivable staff due •
to avoiding pricing exceptions
Benefits to Receiver
Earned discounts due to ability •
to process and pay invoice within
discount period
Free up accounts payable staff •
previously required to:
Handle paper invoice –
Manually process the invoice –
Address exceptions created by –
manual processing
Increased efficiency•
Decreased manual processing –
Fewer errors –
Benefits of Electronic Remittance Advice (820)*
Benefits to Sender
Reduced costs to generate the •
payment
Free up accounts payable staff due to •
reduced time spent:
Generating payments –
Explaining reasons for payment –
amounts
Benefits to Receiver
More rapid reconciliation of payments •
to receivables
Free up accounts receivable staff due •
to reduced time spent:
Reconciling payments with –
receivables
Finding exceptions –
Obtaining explanations for –
discrepancies between amounts
owed and amounts paid
*Assumes that the remittance advice is used to trigger electronic funds transfer between the payer and payee.
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